Qantas says higher fuel costs are biting. Qantas says higher fuel costs are biting.
Life Travel Qantas always seems to be the most expensive airline, but it’s not that simple Updated:

Qantas always seems to be the most expensive airline, but it’s not that simple

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With more than 150 flights a day, Melbourne to Sydney is the second busiest domestic route in the world after Seoul to Jeju City in South Korea.

While four airlines service the hectic route, the advertised fares for seats on Qantas are almost always the most expensive.

An online search at the time of writing showed the cheapest advertised seat on a flight from Melbourne to Sydney on Qantas was $280. A fare with its budget arm, Jetstar, was $88.

Flying on Qantas is, in the eyes of many passengers, preferable to flying on Jetstar.

The former is consistently, and currently, rated the safest airline in the world.

“Qantas has been a leader in the development of the flight data recorder to monitor plane and crew performance, and automatic landings using GPS, precision approaches around mountains in clouds, plus real-time monitoring of engines across its fleet using satellites, enabling the airline to detect problems before they become safety issues,” writes Airlineratings.com.

Jetstar, meanwhile, has attracted the wrath of passengers disgruntled at flight delays, missing baggage and other first-world problems.

But is flying on Qantas really three times better than flying on Jetstar, as the price difference suggests?

Is Qantas’s service consistently better than Virgin’s, which regularly offers cheaper fares on the popular Melbourne to Sydney route?

There are several factors important to understanding the Qantas appeal and its premium pricing.

To begin with, Qantas is the most punctual airline in Australia.

Travel intelligence company OAG reports 86 per cent of Qantas flights last year departed and arrived on time. That compares with 80 per cent for Virgin Australia, the country’s second-most punctual airline.

Virgin Jetstar
Qantas created Jetstar to compete in the budget market. Photo: AAP

Saj Ahmad, chief analyst for StrategicAero Research in London said there was no doubt Qantas was expensive, “but it doesn’t pretend to be anything but a high-quality airline”.

“On many routes, [Qantas] doesn’t have direct competition, and so that too forms a function of price escalation,” he said, referring to Qantas’s Perth-London non-stop flights, which shave hours off the journey by avoiding transfers in cities such as Singapore or Dubai.

A cursory online search reveals advertised fares starting at $1893 for a seat on QF9 Perth to London, compared to $1409 for a seat on an indirect flight with Cathay Pacific.

“Qantas has a 100 per cent monopoly on this route and so can charge a premium,” Mr Ahmad said.

“It will do the same when it eventually launches direct [non-stop] flights from Sydney to London.” 

What about the domestic market?

“Like most full-service airlines, Qantas operates with far bigger overheads and they have to be covered,” Mr Ahmad said.

“That’s why it created Jetstar, to tackle low-cost carriers rather than Qantas take them on and stand little chance of profitability given its ballooned cost structure.”

Steve Creedy, a senior Australian aviation reporter and editor of Airlineratings.com, said it came down to demand and supply.

“All airlines in Australia, including Qantas, have kept a fairly tight rein on capacity. The last spike in capacity was from 2013 to 2015, and that allows airlines to creep their prices up a bit,” he said.

qantas expensive
This website screenshot illustrates the Qantas premium.

Added extras

Mr Creedy, who no longer flies Jetstar because he’s “a big bloke” and the airline has “squeezed so many seats into the cabin”, said Qantas flights were not always more expensive.

“Any comparison also needs to look at ancillary charges, where airlines charge extra for food, baggage, frequent flyer points and the like,” he said.

“If you add up all the extras you need to pay on airlines such as Jetstar, and then compare the total with an airline where all of these things are included, you can find a legacy carrier is not that much more expensive.

“Sometimes it can even be cheaper – and I’ve certainly had that experience with Jetstar and Qantas as recently as last year.”

Mr Ahmad agreed that Qantas’ flights were not always more expensive.

“By using economies of scale across its wide-body fleet, Qantas has some very competitive fares to the US and Asia that form the backbone of its revenue drive,” he said.

He also highlighted Qantas’s massive cache of customer loyalty.

“Airlines across the globe have diehard loyal customers and Qantas is no different,” Mr Ahmad said.

“While it does have a great safety record, I don’t think that’s the primary driver for customers continuing to fly with Qantas.

“Being Australia’s national airline, it’s always been one of the strongest and most recognisable airline brands in the world.”

Mr Creedy had similar sentiments: “Especially on international flights, Qantas can command a bit of a premium on the other carriers because of its reputation.

“Again it comes down to the fact that its seats are priced according to supply and demand. So when lots of people fly, the seats go up in price.

“But airlines don’t get it all their own way because if the market softens and fewer people fly, the balance changes.

“They then either have to reduce fares or redeploy capacity to markets where they can make more money. Qantas has got quite good at doing the latter.”